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2017 Annual Results Presentation
March 2018
Guotai Junan International Holdings Limited | Stock Code : 1788.HK | Wechat: GTJA_GJ | Website: www.gtjai.com
Contents:
2
Key Deliveries
Financial Review
Business Review
Appendix
Key Deliveries
S&P rated “BBB+” with “stable” outlook, Moody’s rated “Baa2” with “stable” outlook - highest credit ratings among
Chinese financial institutions in Hong Kong
3
Total Revenue increased by 24% to HKD 3,132 million, achieving compound annual growth rate of 32% since 2012
Net profit increased by 30% to HKD 1,336 million, achieving compound annual growth rate of 34% since 2012
Maintained industry leading ROE1 of 15% in 2017, up by 3 percentage points to 2016
Total Dividend of HKD 9 cents per share with Payout Ratio of 51%.
Income from Financial Products increased by 162% to HKD 304 million
Income from Corporate Finance increased by 50% to HKD 684 million
Income from Securities Brokerage increased by 43% to HKD 431 million
Notes: Return on Shareholder’s funds
Financial Review
Record High Profit and Revenue with Industry Leading ROE
5
Historically High Revenue Record
1,657
2,277 2,519
3,132
2014 2015 2016 2017
HK$ mn
Historically High Profit Record
802
1,015 1,026
1,336
2014 2015 2016 2017
HK$ mn
Income Statement (HK$’000) 30 December 2017 31 December 2016 Change 2
Fee and commission income
- Brokerage 517,118 393,000 32%
- Corporate finance 683,526 456,649 50%
- Asset management 29,792 28,487 5%
Interest income from loans and financing 1,288,777 1,297,278 -1%
Income from financial products, market
making and investment613,180 343,773 78%
Revenue 3,132,393 2,519,187 24%
Profit for the year 1,336,039 1,026,087 30%
Profit Attributable to Shareholders 1,228,174 969,139 27%
Basic earnings per share (HK cents) 17.7 14.1 26%
Diluted earnings per share (HK cents) 17.6 13.9 26%
Dividend per share (Final) 4.5 4.5 -
Dividend per share (Interim) 4.5 3 50%
Dividend payout ratio 51% 53% Adjusted by 2 p.p.
Book value per share 1.24 1.18 5.1%
Leverage ratio 5.531 3.07 Up
Cost to Income ratio 50% 53% Improved by 3 p.p
Return on Shareholder’s Equity （ROE） 15% 12% Improved by 3 p.p
Notes:
1. Leverage ratio excluding financial products’ position on behalf of clients is 3.17; 2. Rounded Figures
Refined Revenue and Profit Mix
6
Revenue mix
Brokerage16%
(16%)
Corporate Finance
22%
Asset management1%
Loans and Financing 41%
Financial products, market making and investment
20%
Profit mix
Brokerage16%
Corporate Finance
22%
Loans and Financing44%
Financial products, market making and investment
17%(12%)
(14%)
(51%) (1%)
(18%)
(7%)
(57%)
(24%)
Notes: numbers within () is from 2016
Asset
Management
1%
(0%)
7
Sound Return on Shareholders’ Equity and Effective Cost Control
Leading ROE with Growing Net Assets
7,635
10,534 10,991
14.0%
12.0%
15.0%
0
10,000
20,000
2015 2016 2017
Net assets Return on Shareholders' Equity
HK$ mn
Notes: The net asset equals the ordinary shareholder equity from equity item.
13.4% 12.6%
2016 2017
Financial cost / Revenue Ratio
Cost to income ratio
Improved
Improved
53% 51%50%
Sustainable Dividend Policy
8
442 514 517
624
55%51% 53% 51%
0
200
400
600
800
1,000
1,200
1,400
1,600
2014 2015 2016 2017
Net Profit Total Dividend Payout Ratio
HK$ mn
Historical Net Profit and Payout Record
802
1,015 1,026674
1,336
Balance Sheet Extracts
30 December 2017 Contribution* 31 December 2016 Contribution*
(HKD'000) (HKD'000)
Loans and advances to customers 15,583,573 21% 14,538,144 32%
Receivable from Reverse repurchase agreement 1,513,177 2% 480,782 1%
Accounts receivable 4,347,402 6% 1,495,924 3%
Prepayments, deposits and other receivables 120,252 - 151,470 -
Financial products held on behalf of clients 28,246,491 38% 7,424,551 17%
Financial assets (mainly for market making) 8,924,271 12% 5,888,774 13%
Derivative financial instruments 110,461 - 122,001 -
Tax recoverable 7,495 - 24,072 -
Client trust bank balances 12,348,012 17% 12,400,917 28%
Cash and cash equivalents 2,212,502 3% 1,964,398 4%
Other assets 546,748 1% 509,712 1%
Total Assets 73,960,384 100% 45,000,745 100%
Accounts payable 16,952,250 27% 14,871,038 43%
Other Payables and accrued liabilities 473,094 1% 271,681 1%
Derivative financial Instrument 27,722 - 130,083 0%
Bank borrowings 13,781,721 22% 8,911,433 26%
Debt Securities in Issue 16,363,891 26% 5,823,241 17%
- At amortised cost 5,885,015 9% 175,710 1%
- Designated as at fair value through P&L 10,478,876 17% 5,647,531 16%
Financial liabilities at fair value through P&L 9,008,776 14% 3,485,220 10%
Obligations under Repurchase Agreements 6,244,957 10% 930,958 3%
Tax Payable 94,899 - 9,695 -
Others liabilities 21,648 - 33,262 -
Total Liabilities 62,968,958 100% 34,466,991 100%
Ordinary shareholders' equity 8,608,086 78% 8,175,198 78%
Other equity instruments and non-controlling interest 2,383,340 22% 2,358,636 22%
Total Equity 10,991,426 100% 10,533,834 100%
9Notes: Rounded Figures
Business Review
11
Clients’ Assets under Custody
1,500 1,200 1,200
2015 2016 2017
Client Money Client Stocks
16,200 22,400
17,100
Varied Products and Services with High Quality Clients
Clients Stats (As at end of 2017)
Active account: 53,217
New Account: 3,687, including 1,024 Professional Investor (“PI”) Accounts
Average PI Balance: HKD 33.5 million per account (Up by 136% yoy)
Increased Client Assets from PI: HKD 34.3 billion
Assets under custody: HKD 224 billion (Up by 31% yoy)
Enhanced Client Quality – Active Client Average Balance
3.2
4.2
2016 2017
HK$ mn HK$ mn
12
2017 (HKD'000) 2016 (HKD'000) Change
- Securities 430,129 301,318 43%
- Futures and options 25,095 44,084 -43%
- Handling income 47,966 36,396 32%
- Leveraged foreign exchange 2,743 2,068 33%
- Insurance 11,185 9,134 23%
Total Income 517,118 393,000 32%
Market Breakdown
By commission income
Internet vs. Traditional Trading
By commission income
Client structure
By commission income
Brokerage: Solid Results under favorable market condition
Institutions
33%
Retail
67%
Internet
84%
Traditional
16%
HK 79%
US 11%
Stock Connect
(SZ &SH A)
7%
Others 3%
(71%)
(29%) (23%)
(77%)
(64%)
(23%)
(8% )
(5%)
Notes: numbers within () is from 2016
Corporate Finance Achieved Another Record Year
13
2017 (HKD'000) 2016 (HKD'000) Change
Placing, Underwriting and Sub-writing Commission
Debt securities 350,269 250,249 40%
Equity securities 244,920 113,180 116%
Consultancy and Financial Advisory Fee 88,337 93,220 -5%
Corporate finance Income 683,526 456,649 50%
Number of Deals Completed
HK$ 250 bn
HK$ 62 bn
ECM Funds raised
DCM Funds raised:
30
47
22
101
Equity market Debt Issurance
2016
2017
Another Record Year for Corporate Finance Income
HK$ mm
0
100
200
300
400
500
600
700
2015 2016 2017
457
684
281
No.1 as number of IPO
sponsor deals from 2016-2017
(Source：AASTOCKS）
Sponsor Deals Achieved:
Signature IPO Deals
Guotai Junan Securities Co,. Ltd. 国泰君安证券股份有限公司
（Ticker: 2611.HK）
No. of share offer
1,088,933,800 H Share
Fund Raised
HK$17,248,711,392
Listed on Main Board of
Stock Exchange of Hong Kong
Jilin Jiutai Rural Commercial Bank
Corporation Limited九台农村商业银行股份有限公司
（Ticker: 6122.HK）
No. of share offer
690,000,000 H Share
Fund Raised
HK$3,146,400,000
Listed on Main Board of
Stock Exchange of Hong Kong
Joint Global Coordinator
Joint Bookrunner
Joint Lead Manager
Joint Global Coordinator
Joint Bookrunner
Joint Lead Manager
14
Signature Debt Capital Market (DCM) Deals
15
HONGKONG AIRLINES
USD 250 million
7.125%
PERP BONDS
JBR
SINGYES SOLAR
USD 260 million
7.95%
BONDS DUE 2019
JGC
Modern Land
(Retap)
USD 500 million
6.875%
BONDS DUE 2019
JGC
Beijing Properties
USD 300 million
4.375%
BONDS DUE 2020
JGC
Hesteel Group
USD 500 million 4.25%
BONDS DUE 2020
JBR
Jingrui Holdings
USD 400 million
13.625%
BONDS DUE 2019
JGC
Logan Property Holdings
USD 450 million
5.25%
BONDS DUE 2023
JGC
Emperor Group
USD 200 million 5.0%
BONDS DUE 2022
HKD 800 million 4.7%
BONDS DUE 2022
JGC
Steady Growth in Asset Management Business
16
36.5/11.08
3
7.2B
Equity Fund achieved an annual return rate of over 36.5%.
Bond Fund achieved an annual return of over 11.08%.
Set up 3 new private funds throughout the year:
• Guotai Junan Global Total Return Fund SP
• Guotai Junan Value Vintage Equity Feeder Fund
• Guotai Junan Fixed Income Plus Fund SP
The relevant Asset under management (AUM) size is up to approximately HKD
7.2 billion (including advisory; 2016 AUM: HKD 6.5Billion)
Loans & Financing: New pricing to achieve quality margin portfolio
17
HK$’000 2017 2016 Change
Margin loans 968,661 1,106,342 -12%
Term loans 107,035 72,993 47%
Securities borrowing and lending 21,545 19,316 12%
IPO loans 12,314 199 6087%
Reverse Repurchase Agreements 5,344 461 1059%
Banks and others 173,878 97,967 77%
Total 1,288,777 1,297,278 -1%
HK$’00031 Dec
2017
31 Dec
2016Change
Margin loans balance 12,598,758 13,291,347 -5%
Term loans balance 3,070,506 1,246,796 146%
Loan to Value Ratio 25.4% 27.0%Down by 1.6
p.p.
Total Loans Balance 15,583,573 14,538,144 7%
Average margin loans balance 12,309,204 13,350,138 -8%
Balance
• Introduce Margin Calculation By Stock (分级风险定价）
• Competitive funding cost after Upgraded Credit ratings from Moody and S&P
• Enhanced Margin Loan approval process, which allow funds to arrive to client’s account within minutes.
Income
Tremendous Growth in Financial Products
18
Income 2017
Income Statement Item 2017(HK$’000) 2016 (HK$’000) Change
Financial products 304,104 116,087 161%
Market Making 164,873 131,117 26%
Investment 144,203 96,569 49%
Total Income 613,180 343,773 78%
Fast Growing Income from Financial Product
34
116
304
0
50
100
150
200
250
300
2015 2016 2017
HK$ mm
Outlook: Quality Growth based on China Wealth Opportunity
19
China Wealth Growth
Opportunity
Refined Risk Management
Growing Financial Services
High Net-Worth Institution Corporate
Development Strategy Key Clients and Services
• Improved Risk management
and Credit Ratings
• Enhanced Client Profile
• More Wealth management
Products and Service
• Improved Risk management
and Credit Ratings
• Refined Financial Products
Structuring capabilities
• Enlarged Networking in
China
Brokerage, Loans and Financing, Financial Product
Brokerage, Research, Financial Product, FICC
Corporate Finance, Advisory Service, Market Making,
Financial Product
• Experienced corporate
finance team
• Strong Chinese background
and networking in China
Appendix
Company Overview
22
(1788.HK)
~59 %
Shanghai
GovernmentShenzhen Government
Public Float
Shareholders background
~ 41 %PRC Outside PRC
About Parent Company
Public Float
20 years as financial services provider in Hong Kong
(601211.SH/2611.HK)
GTJA is one of the leading securities houses in
China
From 2007 to 2016, GTJA has occupied the top
three places in terms of operating revenue for
eight years
Since 2008, GTJA has been rated as A level of
AA class for ten consecutive years by CSRC,
which is the highest rating for Chinese securities
companies so far
Listed in HKEX in 2017 (2611.HK)By Feb 2018
Credit Ratings
23
Highest Credit ratings among HK based Chinese Financial Institutions
23 June 2017
S&P’s rating upgraded to BBB+
7 April 2017
S&P’s included Company in a positive observation list
27 Feb 2017
Moody’s raised thelong-term issuer rating outlook to stable
6 Sep 2016
Moody’s first assigned “Baa2” and Prime-2 short-term issuer rating
9 Aug 2016
Moody’s first assigned [BBB] long-termand [A-2] short term issuer rating
Tim
elin
e
Note： represent the latest ratings
About us
24
Possess the highest credit ratings among all Hong Kong based Chinese financial services providers
Large amount of high net worth clients
Professional ability on asset research and
allocation
Industry-leading profitability
Net profit keeps escalating
High dividend yield
Improving risk structure through strong risk
management and compliance team with careful
investment management
Strong brand reputation Support from
parent company
Who are we? What are our mission?
Targets to be financial services provider offering first-class products to institutional investors and wealth
management professional for high net worth individuals
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This presentation does not constitute an offer or invitation to purchase or subscribe for any securities or financial instruments or the provision of any investment advice, and no part
of it shall form the basis of or be relied upon in connection with any contract, commitment or investment decision in relation thereto, nor does this presentation constitute a
recommendation regarding the securities or financial instruments of the Company.
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in these materials. It is not the intention to provide, and you may not rely on this presentation as providing, a complete or comprehensive analysis of the financial or trading position
or prospects of the Company and its subsidiaries (the "Group"). The Group or any of its affiliates, their respective advisers or representatives accepts no liability whatsoever for any
loss howsoever arising from any information presented or contained in these materials. None of the Group, nor any of its affiliates, officers, employees, advisors or representatives
shall have the obligation to update on further changes to such information and opinions or to correct any inaccuracies or omissions in this presentation and accuracy of the
information and opinions contained in this presentation is not guaranteed.
This presentation contains certain forward-looking statements with respect to the financial conditions, results of the operations and business of the Group and certain plans and
objectives of the management of the Group. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results
or performance of the Group to be materially different from any future results or performance expressed or implied by such forward-looking statements. Such forward-looking
statements were based on assumptions regarding the Group’s present and future strategies and the political and economic environment in which the Group will operate in the future.
Reliance should not be placed on these forward-looking statements, which reflect the view of the Group’s management as of the date of this presentation only. There can be no
assurance that future results or events will be consistent with any such forward-looking statements.
The financial information relating to 12 months ended by 31 December 2017 that is included in this presentation as comparative information does not constitute the Company's
statutory annual consolidated financial statements for that year but is derived from those financial statements.
Disclaimer